Abstract
There have been consistent calls for import relief from by the US Sheep industry, dating back to 1960, due to the surge in lamb meat imports from Australia and New Zealand. The most recent call for import relief was a petition letter submitted by R-CALF USA to the US Trade Representative in 2023. This petition letter requested the initiation of a global safeguard investigation and requested the imposition of a trade policy that would increase the domestic production’s market share to 50%. The main concern highlighted in the letter was the dominance of imports, which accounted for approximately 70% of the market share, thereby limiting domestic production to 30% in 2022. Using a baseline scenario analysis, dependent on base values from 2022, to determine the target tariff rate or its equivalent pure quota volume that would increase the domestic production’s market share to 50%, showed that the target trade policy is extremely restrictive, leading to an increase in producer surplus, but significant decline in consumer surplus. In addition to the above, this paper aims to assess the impact of two hypothetical tariff rates; an inflation adjusted tariff rate, 21%, and Former President Trump’s proposed 10% ad valorem tariff rate, using a static numerical simulation model. Under the simulation model, with declining supply and expanding demand, the effectiveness of the hypothetical tariff rates is limited and only causes temporary relief to the industry. If supply is anticipated to witness positive growth which is still slower than demand, this would increase the effectiveness of the hypothetical tariff rates, causing a significant initial jump in the domestic production’s market share in the first year of its implementation, compared to the initial jump under shrinking supply. This initial jump significantly slows down the decline in the domestic production’s market share, which provides room for breath for the industry.